Minfal has planned a programme
to increase crop yield from 5 to 10 per cent per annum till 2005

From Shamim Ahmed Rizvi, IslamabadJan 15 - 21, 2001

A little attention to the Agriculture Sector during last one year has
proved beyond doubt that there is no business like agriculture, specially in the context
of Pakistan. The country which imported about 3 million tonnes of wheat in 1998-99 ended
up with a surplus of 1 million tonnes in 99-2000. Unfortunately, however, nature has been
unkind this year and prolonged dry weather and consequent shortage of water for irrigation
purposes has made impossible to maintain the previous tempo during the current season.

Undaunted by this temporary setback, however the government is rightly
pursuing its policies of harnessing full potential of agriculture sector. It is heartening
to note that the present government is fully conscious of the large potential in
Agriculture sector. Chief Executive Gen Pervez Musharraf while presiding over a high level
meeting directed for the constitution of a committee to prepare comprehensive proposals
for the promotion of various crops, besides approving a sum of Rs. 5 billion for the
development of new avenues in the agricultural sector. The attention which the government
of Pervez Musharraf has given to the agriculture sector since assuming the office on
October 12, 1999, reflects the new administration's resolve to achieve self-sufficiency in
agriculture. The last year made it abundantly clear that if right strategies are adopted
and then efficiently implemented, the agriculture sector can be revolutionised.

General Pervez Musharraf's directive for formation of committee to
institutionalise agricultural marketing together with crop-wise proposals for
reorientation of the entire farming sector, with due emphasis on self reliance, food
security, import-substitution and export promotion is a welcome step. The Food,
Agriculture and Livestock Ministry Minfal has planned a programme to increase crop yield
from 5 to 10 per cent per annum till 2005 to achieve self-sufficiency in deficit crops by
2010. The target of wheat will be 23 million tonnes in the next five years and the country
will achieve self-sufficiency by the year 2003 in oilseed production.

An agriculture data bank would be created, including computerised land
records and crop statistics and reporting through satellite imageries to be established at
the provincial levels and networking at the federal level. The number of farm machines
will be increased by 20 per cent such as tractors, implements, harvesters by 2005. The
agriculture polytechnic institutions at the level of districts will be established. The
ministry has also planned to introduce insurance for agriculture labour and farm works.
Establishment of Federal Agriculture Bank to introduce concept of working capital in the
agriculture sector had also been suggested.

An extremely dynamic agriculture extension service would be created
that would cater to the development of quality of human resources and provide knowledge
for modern agriculture techniques and practices.

The latest policy decision in this direction is to grant status of
industry to the agriculture and introduce corporate farming in the country. An incentive
package to attract local and foreign investment in corporate agriculture farming is being
prepared, which envisages giving farming the status of industry, a five-year tax holiday,
exclusion of big land holdings from future land reforms and no tax at district level.

To finalize these incentives, the federal government has called an
inter-provincial meeting next week. The meeting is being held in the backdrop of Chief
Executive General Pervez Musharraf's directive to the Agriculture Ministry and Small &
Medium Enterprises Authority (SMEDA) for preparing a policy package for Corporate
Agriculture Farming (CAF).

According to the proposed package, the land to be used for the purpose
of Corporate Agriculture Farming will not be included in any land reforms, undertaken by
the government in future.

The CAF will be taxed on the pattern of industry, through a tax holiday
for the first five years will be allowed. Moreover, there will be no hurdles in exporting
the CAF production nor there will be any tax at the district level.

Electricity tariff for these corporate farms will be the same as
applicable to agriculture tube-wells. Gas, water and phone facilities will be provided by
the state. The initial lease of land will be for 50 years extendable for another 49 years.
The owners will have the first right to purchase the CAF land after that period. As far as
proposed interventions in the policy are concerned, officials said corporate agriculture
income tax would be levied on these companies at the rate similar to commercial companies.

To avoid non-productive and upfront loading on projects, a nominal sum
of Rs. 100 per acre will be charged as land transfer or release registration fee. The
Agriculture Development Bank, along with other financial institutions, will announce
credit lines for corporate agriculture farming. These funds will be available to viable
projects as equity participation or loaning facility.

A support committee will be created in MINFAL, comprising officials
from the federal and provincial ministries of agriculture, Board of Investment, provincial
boards of revenue and farmers organisations to launch a campaign for attracting foreign
and domestic investment in the agriculture sector. All proposals from domestic and foreign
investors for the CAF will be placed before the Board of Investment, which will finalize
the case in consultation with the Agriculture Ministry.

The provincial governments will identify, within 60 days to MINFAL, a
complete list of potential cultivable lands in blocks greater than 2000 acres, suitable
for large-scale mechanized farming along with terms and conditions.

The induction of corporate companies will bring modern production
technology, access to capital, direct access to domestic and foreign markets, and
professional management expertise. It will also generate rewarding opportunities for the
inputs industry, as the agricultural companies will act as large consumers of farm inputs.
On the marketing side, agricultural companies generally undertake their primary processing
and grading at farm sites and supply raw material to agro industry.

Some Chinese and Arab investors have shown keen interest to invest in
corporate farming and other Agro based industries. The Centre has asked provinces to
immediately identify state lands which could be offered to Chinese investors for the
development of model agricultural farms in Pakistan.

The provinces have been informed that Pakistan and China had signed an
agreement on economic and technical cooperation. Which inter alia entails that the Chinese
government would intitiate a project of modern farming in Pakistan. Under the agreement,
the Chinese government will provide capital and expertise while Pakistan would provide
land and the favoured investment policy.

Giving details of this development, the sources said that the proposal
for leasing out agricultural land to a Chinese organization for development of model farms
was earlier moved by the Chief Executive General Pervez Musharraf during his visit to
China.

The sources said that the Chinese investors had also expressed strong
desire for setting up a pesticide plant in Pakistan as pesticides worth Rs. 14 billion
were sold annually to the farmers during the cotton season along. Ironically, all the
pesticides were imported as Pakistan had no local to produce them in the country, sources
said.